In a significant shift in the cryptocurrency landscape, Bitcoin exchange-traded funds (ETFs) have experienced a remarkable resurgence, attracting $634 million in inflows in the first two days of September alone. Over the past week, total inflows reached an impressive $1.1 billion, contrasting sharply with the $1.2 billion that flowed out of these funds the previous week. This trend comes as investors eagerly anticipate key economic data later this week, which may influence decisions made by the Federal Reserve regarding interest rates.
Market strategist Joel Kruger from LMAX Group highlighted that Bitcoin’s recent recovery has been bolstered by increased liquidity in stablecoins and renewed investor interest. He noted that while September typically serves as a period of consolidation for cryptocurrencies, this year might see a more shallow consolidation phase. Factors such as the growing adoption of ETFs, heightened institutional investment, and supportive regulatory changes suggest a robust fundamental backdrop as the market heads into the fourth quarter.
Attention is now focused on the upcoming US jobs report for August, scheduled for release on Friday. Analysts indicate that softer-than-expected employment data could lead the Federal Reserve to consider a larger rate cut of 0.50% during its crucial meeting set for September 16 and 17. Geoffrey Kendrick, the global head of digital assets research at Standard Chartered, emphasized that while a 0.25% cut appears almost certain, disappointing payroll figures could prompt a more significant adjustment, potentially providing a supportive environment for digital assets.
Investment flows into Bitcoin ETFs reflect a changing dynamic, with wealth managers and institutional investors increasingly incorporating these products into their portfolios. According to James Seyffart, an ETF research analyst at Bloomberg Intelligence, advisors have emerged as the predominant holders of Bitcoin ETFs, with wide-ranging increases in ETF exposure recorded across various categories in the second quarter.
Current market expectations indicate a 97.6% probability of a 0.25% cut in interest rates, according to CME FedWatch data. In the broader cryptocurrency market, Bitcoin has seen a slight decline of 0.3% over the past 24 hours, trading at approximately $110,724, while Ethereum has experienced a modest increase of 1.1%, reaching $4,398.
